Tom Liston from the SANS Institute has a story at isc.sans.edu about a black hat SEO technique. Many sites have had their DNS zone records augmented to have new subdomains direct to other's sites. Tom indicates that those other sites seem to engage in pornography, drugs, and facebook apps. He also makes some suggestions to detect and defend against this happening to your site.

http://isc.sans.edu/diary/What+s+In+A+Name+/11770
http://it.slashdot.org/story/11/10/12/1920247/seo-via-dns-piggybacking